30. CAPM and Cost of Capital. Suppose the Treasury bill rate is 4% and the market risk premium is 7%. (LO12-3) a. What are the project costs of capital for new ventures with betas of .75 and 1.75? b. Which of the following capital investments have positive NPVS? Project Beta Internal Rate of Return (%) 1.0 14 Q 6. R 2.0 18 0.4 7 T 1.6 20

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A: Cost of capital can be found out from the capital asset pricing model using equation.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.